Cheese, wine, truffles, food, children, goats, recipes, tango, juggling between two continents, new projects, an old stone house I love, raising two teenage boys.

Thursday, May 28, 2009

Starting in a Business in France

I spent two and a half hours at a meeting with the agency called Actif Conseil in Avignon the other day. The goal was to have the route to opening a business in France clarified and outlined for me and a number of other potential small business owners (all women by the way, interesting, hm?). Yes, I've run a business for over ten years in France alongside Erick, but... it was rather complicated in its structure, and I wasn't involved in the accounting, or in paying the taxes, and now it is time I understand how things function in this not a truly capitalist-bent country.

Despite checking on google maps ahead of time, it took me a moment to find the office -- a tiny plaque on a discreet door with no parking in front, and much dominated by the bakery to the left and the car repair garage to the right. I did quite a bit of bit of backing and forthing on a major street before finding said office, and then going back outside to move my car across the street to the supermarket parking lot. I then trotted up the stairs to join the others waiting for the presentation to begin.

First off, be prepared. Be enthusiastic. Have the will to go forth. This is harder than you might imagine as enthusiastic is conflated with naive in French culture, and nay-sayers are always more numerous than supporters. Then, send out surveys and get to know your competitors, do "études du marché" and see if your idea resonates.

All the classic advice was there: identify your client base, get to know them, give them a name, a job, number of kids, etc., and find out where they live, what their salary is, and how they spend their discretionary income. Figure out your pricing structure and your placement on the market taking into account traditional mark ups, your expenses, etc., but also your competitors' range of prices.

Have an idea of how you will market -- web sites are simply shop windows our young presenter reminded us. They are not a marketing device in and of themselves, you have to send people to it via your business card, ads in magazines, and ideally, word of mouth. This is not new to anyone who's attempted to run a business or read Money magazine, etc., but it was to many seated around the table.

We were a group of seven women of varying ages and origins: a quite silent Indian woman in the group, a young Magrébine, a very vocal woman of about 50, and three more around my age, 40-45. Before us was a dynamic young man and his powerpoint presentation. He ad-libbed here and there as this is what he does everyday. He puts people on the path (or removes them) to creating small businesses.

In France, the generous socialist system is slowing trying to re-direct itself to assisting people not just to get a basic minimum wage job, but to choose other options, such as creating a business, or taking over an existing one. When I did my mini-bilan de compétences which tested my basic skills, aptitude, and experiences, it was clear to the woman in charge that I had the profile to run my own business (this is reassuring, non?)

* sociability -- I like people (though I'm not necessarily therapist material), but I take great pleasure in my clients and artisans* organization and figures -- I can handle these competently, but don't ask me to be your accountant* movement -- I'm not someone who sits at a desk all day, thus my love of hikes, outings, dancing, etc.,* artistic -- I'm not an artist myself, but I admire others who are, and surround myself with beauty, taste, pleasure* intellect -- I'm not an astro-physicist in his laboratory, but I crave stimulation and the chance to learn* management -- I can multi-task, direct others, delegate, orchestrate complicated schedules, etc.,

Thus, with these test results in hand, the local unemployment office is helping me (for free of course) put together the necessary materials to go forth, and/or directing me to the appropriate agencies.

I've a list of people to call and meet -- the Chamber of Commerce and Industry (where I'll speak with a tourism specialist) the Chamber of Agriculture (as so much of what I do involves agricultural producers), etc.,

There is not a SBA here (Small Business Association) as in the US, but there are privately run, publicly funded entities present to help you put together the business proposal and find matching start-up funding with minimal to zero interest rates. Various organizations are willing to loan sums from 3,000-10,000 Euros for start-up capital. However, they are not there to replace having a bank as a business partner. They recognize that it is easier for a bank to make a loan for a tangible object such as a car or the business offices, but far more rare for a bank to fill the start-up coffers.

And all these various sources of assistance are available to the unemployed of over six months. Fascinating, hm?

As the two and a half hour presentation continued, our young man presented us the various legal structures statut juridique, that we might choose for our business. They each have their virtues and vices. The most classic might be a micro-entreprise. For this you are your business and all that you possess is held as collateral to it. This is very scary to a Frenchman. Imagine losing your house if you've over-borrowed, etc? However, this is also the structure that most artisans have by necessity, be they bakers, woodworkers, or hairdressers.

Another option is more akin to a corporation. It involves multiple partners, and creates a non-personal legal entity run by you and your colleagues. In this case, the person(s) starting the business must decide upon a salary, and pay the necessary social charges, etc., out of the salary and the business capitol. However, in this situation, your personal effects (car, house, etc.,) are protected in case of a financial collapse. The first is a SARL (a minimum of two associates), the second is the EURL (which can be just one person). For these, a charter of sorts outlining the business, its goals, responsibilities, how it is structured, etc., is required as are yearly board meetings, and announcements of such. Lots more paper work. An accountant is a very good idea.

For the micro-entreprise you can opt to pay taxes and charges on your direct income after deductions, VAT taxes etc.,; or you can opt for what is called an abatement by which you pay on 50% of your gross income or 71% of your gross income (the former if you offer a service, the latter if you are selling a product). For this situation, you neither charge nor deduct the VAT tax.

Once you decide on the legal structure, you need to understand your social charges' rates (for unemployment insurance, retirement, health insurance, maternity insurance, etc.,) and how often you need to pay them. This is referred to as the régimes des cotisations sociales. You can be salaried, or a travailleur non-salarié, or a micro-social.

If you opt for the last option, it works with an abatement as well, meaning, you pay from 12 to 21.3% of your gross income monthly to the State for your charges.

To complicate things further, if you are a merchant, or typical small business owner, you calculate 45.05% of your net income as social charges.

A first year business can pay a base fee of 3300E for the charges, no matter the income.

The French are all excited by a new legal structure called the auto-entreprise. It's supposed to be simpler to put into effect, allow you to combine two incomes (a salary during the day, and your small business effort on the weekend for instance which used to be outlawed), and to calculate by percentage what you are to pay each month. Thus the months you earn nothing, you pay nothing (which is not the case in the traditional micro-entreprise structure).

Our young man didn't like this one too much as too many people have surged towards starting businesses without his most essential advice on how to do so. He regaled us with figures and facts on the success and failure of businesses in France, and how entities such as his can dramatically change these. But in general, this new structure is being greeted with much suspicion by the Chamber of Commerce and Industry and other official institutions that feel un-connected to this new idea that might just encourage people to act on impulse. God forbid, right?

I left the meeting with lots of notes, a bit better informed, but also rather confused. I once thought I was a smart woman... France and its many complicated laws can quickly humble you. However, it is reassuring to know that all sorts of simulated programs exist on the computer to test your business ideas, figure out what level of taxes, charges, etc., you'll be paying, and what possible financial help you might be in a position to obtain. This I find most interesting, and essential. So, perhaps next fall when the summer is over, the kids back in school and life a bit more under control (though is it ever?).